Lebanon’s electricity tariff dilemma: Pay more to EDL or pay more to generators?

Report by Bassam Abou Zeid, English adaptation by Karine Keuchkerian

In Lebanon, gasoline and diesel prices, as well as private generator electricity bills, fluctuate with oil prices. But the tariff for Électricité du Liban (EDL) cannot move.

Energy Minister Joe Saddi has proposed a variable electricity tariff to the Cabinet. Under the proposal, when oil prices rise, the electricity bill would increase according to a set formula, and when prices fall, it would decrease.

The idea is simple: A shopkeeper cannot sell goods for less than what they paid for them without eventually going out of business, and that is what is happening with electricity.

The proposal did not pass in the Cabinet because most ministers argued that “this is not the right time” and that they do not want to add further burdens on people.

But this is where the calculation begins: If Électricité du Liban cannot afford to buy enough fuel, electricity supply hours decrease, pushing consumers toward private generators, meaning that, in an effort to protect them from an Électricité du Liban bill, they end up paying the generator bill instead.

Official figures show that Électricité du Liban’s tariff for regular subscribers is 10 cents per kilowatt-hour for the first 100 kilowatt-hours and 27 cents per kilowatt-hour for consumption above that. Generators, meanwhile, already have a variable tariff that is adjusted monthly based on diesel costs. It currently stands at around 60 cents or more per kilowatt-hour, in addition to a fixed subscription fee.

So the question is no longer simply whether to introduce a variable tariff. The question is who will calculate the actual cost to consumers and which option would be more affordable for them.

Within the Cabinet, there appears to be a shift in positions. Finance Minister Yassine Jaber supports a variable tariff if it actually leads to increased electricity supply hours.

The Energy Minister says that, to increase electricity supply at present, the state must pay its outstanding dues to Électricité du Liban, which currently amount to around $350 million. The minister has called for the state to pay around $50 million per month to provide liquidity and purchase fuel. 

The state has made only one payment so far. He also called for the state to cover exemptions granted to southern Lebanon, as well as the cost of repairing the damage.

The idea of a variable electricity tariff has also reached Washington, where Minister Saddi and Prime Minister Nawaf Salam heard from the World Bank and the International Monetary Fund that adopting such a tariff is necessary as a reform measure.

Between Beirut and Washington, the Cabinet is expected to revisit the proposal and, more importantly, tell Lebanese citizens clearly what is holding up the variable tariff, how much cheaper or more expensive it would be compared with generators, and what protections would be in place for the first consumption bracket and for the most vulnerable households.